Lucerne water rates spike again

LUCERNE &GT;&GT; New water rates for Lucerne took effect Friday after nearly two years of review by the California Public Utilities Commission (CPUC). The rate increases faced opposition from Lucerne residents and the Board of Supervisors (BOS), who believed residents were already struggling with high water rates before the spike.

California Water Service Company (Cal Water), which serves Lucerne and parts of Duncans Mills, Guerneville, Dillon Beach, Noel Heights and Santa Rosa, issued a news release that detailed the changes made in its 2012 General Rate Case (GRC) on Aug. 14. According to the news release, a typical residential customer using 3,740 gallons or 5 cubic feet (Ccf) of water per month can expect to see a $13.66 increase per month in their bills to $107.41. Additionally, customers enrolled in the company's Low-Income Rate Assistance (LIRA) program can expect a decrease of $1.61 per month in their water bills to $80.14.

Rates were scheduled to be effective Jan. 1 and Cal Water was authorized by CPUC to retroactively collect revenues to recover the difference between interim and new rates through a temporary surcharge, beginning mid-September.

Rates will also increase by unspecified amounts in 2015 and 2016 with "smaller, inflationary-type increases," according to the release.

With the funds from increased rates, Cal Water will be able to make necessary infrastructure improvements, including the replacement of aging water mains, upgrades to the system's water treatment plant and improving preventative maintenance, according to the release.

"There are several smaller Cal Water service areas that have a low customer base," Gay Guidotti of Cal Water said. "But with high water quality issues that need to be resolved, that's quite expensive to make those changes, especially when they have to be spread over a small population."

Since Cal Water's GRC was filed in 2012, the BOS and Lucerne residents have questioned Cal Water's use of its funds and the frequency of rate increases.

Residents have seen rate increases from $2.24 per 100 cubic feet of water in 2004 to $5.44 in 2006 and to $7.70 in 2011, according to www.lucerneflow.org.

In a letter from the BOS to CPUC written in August 2012, supervisors noted that residents were "already struggling" with their water rates. The letter also expresses the BOS's skepticism behind the motivation for the rate increases, citing $108,000 for Cal Water employee salary increases, an additional $38,000 for employee benefits and the cost to remodel Cal Water's San Jose office in 2011.

Additionally, the BOS accused Cal Water of using "some creative math ? to reflect a much lower average rate than is typical for the average, full-time Lucerne resident" in Cal Water's definition of a resident's average bill. With Lucerne's high number of homes used as vacation or second homes, the BOS stated the community had a vacancy rate of 25 percent, affecting what Cal Water considered an average bill. While the "typical" rate was listed at $62.85 by Cal Water in 2012, the BOS showed occupied residential units were often paying $150 to $200 every two months.

During a settlement agreement that took 26 weeks to complete, Cal Water, the CPUC and numerous other parties, including Lake County government serving as the intervenor on behalf of the residents, "a lot of changes in the rate structure" were made from Cal Water's original GRC, Guidotti said.

"During settlement, there was great discussion about the affordability of rates," Guidotti said. "They worked to beef up the low-income program and also recognized they could give them (low-income households) a discount for their low-rate tier usage."

A new addition to Cal Water's rates was to create a low tier of water usage. Low-income residents using under 5 Ccf per month will be offered a discounted rate, according to Guidotti.

"That's going to be easy for people to meet," Guidotti said.

Low-income rate assistance used to be provided at a flat rate. Under the new GRC, low-income residents will receive a 50-percent service charge with a cap of $30.

According to Supervisor Denise Rushing, who has been instrumental in working with Lucerne residents to lower their water rates, the settlement "was the best we could have hoped for."

Within the settlement agreement, Lucerne received the maximum benefit that Cal Water's LIRA and Rate Support Fund (RSF) programs offer, Rushing said. The RSF is a fee Cal Water system customers throughout the state pay and creates a subsidy that is used to support systems' residents with high-cost water systems.

However, Lucerne's high water rates aren't going to be solved through the process that Cal Water uses to make requests for rate increases that are then argued down and approved by the CPUC, Rushing said. Going through state legislation has a chance of making the significant changes Lucerne needs though.

An in-depth story regarding Lucerne residents' advocacy to lower water rates will appear in a later edition of the Record-Bee.